Most settings were left at their default option, but here are the ones that I have changed:

This one is most important, otherwise the game is almost unplayable:Input -> Cursor Clipper -> ON (instead of default, in which case the cursor could leave the window and cause a number of issues as I’ll detail further below)

These ones are merely of preference:

Main -> Position -> Desktop center (instead of X,Y coordinates, centers the game on screen)

Main -> Position -> Window Initial position & size (although it’s just personal preference, it is helpful to increase the values in fields “W” and “H” to adjust the window size for users with large desktop resolutions, 1024×768 is default for the game but it will run nicely with values like 2560×1920 on a 4k screen, albeit the framerate might drop drastically)

Video -> Window size & position -> Free (instead of Floating, this prevented the game from resizing itself to the default 1024×768 size while in the main menu, but sadly not ingame)

Input -> Cursor handling -> Release mouse outside window [ticked] (Sometimes DXWnd would lock the cursor inside even when the game is not focused, this option seemed to help for me)

DirectX -> Filtering -> Full Bilinear (instead of ddraw default, this may help increase framerate if the window size is set very large, otherwise ddraw default seems much faster in 1024×768)

DirectX -> Vsync -> ON (instead of default, it increased my fps by a few with “Wait for frequency” option selected just below)

Important notices:

The game must be configured to be full screen through the original launcher, but set to launch in windowed mode in the DXWnd options, otherwise it won’t work.

The game seems to have a problem with losing focus (alt-tabbing). Most notable is that when ingame, clicks no longer seem to work on the world (even though the cursor updates to highlight things of importance). However, the menu (accessed by pressing escape) still works, making it possible to create a save file and re-launch the game, although the quit option seems to break, requiring a forced shutdown.
Also worth noting that the window will resize to 1024×768, which is preventable during the main menu with a dxwnd option listed above

Furthermore, the game doesn’t seem to draw frames when on a secondary monitor. I’ve been unable to find a DXWnd flag that helped with this, it may be useful for those on a large primary screen wanting to play on a smaller side monitor due to framerate issues, but it might be out of our control at this point.

If anyone has better luck with alt-tab support or improving framerates with large window sizes, please share it.
I have tried going through my graphics card’s (Nvidia) control panel to fiddle with the 3D app settings but I’ve had no luck there.

It’s interesting to note that for me it wasn’t necessary to enable windows compatibility mode, specifically run as administrator, disable dpi scaling or disable Nvidia’s DSR settings, but they might be worth trying if all else fails.